Web-enabled technology makes fast work of trade regulation compliance

Despite more than five years of on-again/off-again negotiations, the major stumbling blocks to a global free-trade agreement are differences between developed nations—the U.S., Japan, and the European Union—and the major developing nations, represented primarily by China, India, and Brazil.

By Carolyn Heinze (carolynheinze@free.fr)

09/01/2007

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Despite more than five years of on-again/off-again negotiations, the major stumbling blocks to a global free-trade agreement are differences between developed nations—the U.S., Japan, and the European Union—and the major developing nations, represented primarily by China, India, and Brazil.

The latter group, among other things, wants its more economically advanced counterparts to reduce the amount of subsidies they pay to farmers. Anyone who follows the U.S. political scene knows that farm subsidies are a sensitive issue, and one the U.S. government is unlikely to cave on anytime soon.

That means manufacturers doing business in multiple countries must continue to sort out numerous set of rules and regulations for shipping and receiving goods. The good news: There is technology to make this somewhat easier.

A number of software vendors offer Web-based applications to handle global trade issues. Choices in this area run the gamut from best-of-breed solutions offered by independent software vendors to trade management modules integrated with ERP suites from the likes of SAP , Infor , and QAD . Oracle also plans to develop a trade-management module.

Management Dynamics , a best-of-breed supplier, describes its Trade Collaborator package as an enterprise-class, Web-native application to centrally manage trade agreements, and import and export compliance. Manufacturers are seeking out this type of functionality as a means of coping with the constantly changing global business landscape.

“From my perspective, a lot of the tariff regulations are built to respond to the old type of manufacturing,” says Wayne Morris, VP of division services at the Association of Home Appliance Manufacturers, Washington. “They've become very restrictive in today's environment, which involves multiple movement of goods, of platforms, and of various stages of work-in-progress [in] different countries.”

Regulations related to health, safety, and the environment result in the conundrum: What's acceptable in one country may not be in another. Bill Primosch, senior director of international business policy at Washington-based National Association of Manufacturers, uses Korea as an example.

“In Korea, the standards are a bit different with regard to energy use,” says Primosch. Some U.S. companies have encountered issues with getting their products into Korea as a result. Protectionism toward local markets also exists.

In 2006, the European Union banned the use of lead in circuit boards, forcing North American manufacturers—which aren't restricted by this regulation on their own soil—to reassess the fabrication of the components and final products slated for European consumption. Standards like the RoHS Directive—the restriction of the use of certain hazardous substances in electrical and electronic equipment—are subject to interpretation.

“In Europe, companies could self-certify that they meet the requirements,” Primosch explains. “In China, foreign companies will have to pay a third party to ensure their products meet the Chinese standards. They will have to label their products in unique ways, and they will have to indicate the end-of-life period for their products.”

While complying with international trade regulations remains a complex undertaking, Morris points out that the United States has benefited from trade agreements it has negotiated with nations such as Australia.

“The bilateral agreements that the U.S. has negotiated allowed for more marketing of goods in both directions,” says Morris. “It definitely reduced the barriers in those countries where we have free trade agreements. When negotiations on worldwide agreements aren't able to move, the bilateral ones can. The strategy of putting emphasis on both has been a winning combination for the United States over the last 10 years.”

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